Mistakes to Avoid When Selling your Business

Companies / SME Sep 25, 2015 - 11:59 AM GMT

Once you have made the decision to sell your business you will probably be eager to get on with it and complete the process as soon as possible. But what you have to remember is that if you rush things you are bound to make mistakes. Whether you have decided to handle the sale yourself or use the services of a business broker, you can help yourself by following these suggestions to avoid the pitfalls.

Lack of Preparation

Before you even market the business you need to get it ready for sale and that means taking stock of the entire operation, from staff numbers and contracts to equipment inventories to all the financial issues. It is very difficult to put an initial valuation on a business when everything is in disarray and even with the services of a professional valuer a lack of precise preparation can cost you dear in the long run. Make sure you keep accurate and up to date records and document everything; clear and readable paperwork is a huge advantage in persuading a buyer to buy!

Too Much or Too Little Confidence

Over or under valuing your business will have obvious drawbacks; an over valuation will deter buyers or drive you to refuse fair offers which you believe to be unreasonable, whilst an under valuation will sell you short. A professional business valuer has extensive knowledge of the market and can cast a realistic and independent eye over the business to achieve a proper valuation and can see aspects you may have missed. This way you can avoid the pitfalls which come with having unrealistic expectations.

Handling the Sale Personally

By not using the services of experienced professionals like solicitors, business brokers and accountants you will no doubt save yourself some money. But this may be a false economy in the long run. It can take a long time to sell a business – up to a year - and if all your time is taken up with overseeing the sale this will distract you from the all-important day to day running of the business – which is essential to maintain its attractiveness to buyers – and this can have the very opposite effect on the sale price to what you hope to achieve. You need to keep the business at its best all the way through to the end of the process but, if you are trying to do everything yourself then at some point you will hit a wall of fatigue. By far the better way is to step back and let a business broker take care of the sale while you take care of your business.

Failing to Appreciate the Importance of Confidentiality

When a buyer expresses interest in a business the standard practise is to get them to sign a confidentiality agreement. This binds them into the process by allowing them access to your business information but, more importantly it protects your company by forbidding the buyer from damaging your business by misappropriating sensitive information. It is also vital to ensure the sale is marketed in confidence to avoid a discouraging and detrimental effect on staff morale. A drop in production could well damage the prospects of a sale.

Misrepresentation of the Business

Naturally you want to show your company in the best light in order to get the best price but beware of exaggerating facts. Giving a false representation to a buyer is a serious mistake, which can only hurt your personal reputation and that of your company, so honesty is always the best course of action.

In conclusion, however tempting it may be to try and handle a sale on your own, it’s best to let the experts handle the sale for you to avoid the mistakes that can sabotage any deal.

Advice supplied by Sovereign Business Transfer – specialists in selling your business at the right time for the optimum price

By Boris Dzhingarov

© 2015 Copyright Boris Dzhingarov - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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